In August and October, the department denied Freedom of Information Act requests by Bloomberg News seeking parent default and deferment numbers by college, saying it has yet to complete its analysis by institution. The agency provides default data annually, broken out by school, for most student borrowers. Those rates help determine which schools can continue to access the loan program.
We cant fix problems in the student-loan programs if researchers, policymakers and consumers dont have access to the information they need, Sen. Elizabeth Warren, a Massachusetts Democrat, said in an emailed response to questions.
Sen. Lamar Alexander, the Tennessee Republican who chairs the Senate Health, Education, Labor and Pensions Committee, plans to look at ways to improve the disclosure of loan information in forthcoming legislation, according to a spokeswoman.
Denise Horn, an Education Department spokeswoman, said the government is committed to keeping college accessible and affordable, while helping families make informed choices about borrowing, including parent loans.
As part of those efforts, the department offers loan counseling to all PLUS loan applicants to empower parents with additional details on their loans, Horn said in an email. We believe this is an important component to ensuring borrowers are aware of and understand their repayment obligations.
Maria Correa, a 63-year-old secretary and breast-cancer survivor, is one of those parents being crushed by debt. Correa, who moved to Chicago from Manila in 1982, began borrowing from the government in 2009 to help send her daughter to DePaul University, a private college in Chicago. She took out $120,000 in parent PLUS loans over four years, in addition to the $27,000 her daughter borrowed from the government.
Parents like Correa can borrow the entire cost of a childs college education — in some cases more than $50,000 a year — without having to provide income data. The government requires only that they dont have adverse credit for two years, a duration reduced from five years by the Education Department last year. Applicants can have loan balances of $2,100 that are delinquent 90 days or more, are in collection or charged off and still qualify for a PLUS loan.
It was so easy to get the loan, Correa said over lunch at a Macys store in downtown Chicago, near the office where she has worked for the past 27 years. I tried my best to help out with my daughters needs.
Correas family budget spiraled down, she said, after her husband, Marc, now 68, suffered a stroke in 2010 that left him paralyzed on his right side and permanently disabled. He previously was employed by a restaurant group at Chicagos OHare Airport repairing equipment. Now his Social Security checks mostly go to pay for medication, Correa said.
Correa deferred repayment while her daughter was in college, as a law passed by Congress in 2008 allowed her to do. Now shes in the second year of a maximum three-year hardship deferment. Meanwhile interest has been accruing on her 7.9 percent loans, swelling her debt to almost $170,000.
Every day its on my mind, said Correa, who lost her house in 2012 because she couldnt afford the monthly mortgage payments of more than $2,000. How am I going to pay it?
Correa, who moved with her husband to their daughters home in Bolingbrook, a Chicago suburb, said she plans to use the third year of her hardship deferral and then enter a 25-year repayment plan that will lower her monthly bill to about $1,500 based on her current balance, instead of $2,000. If she makes every payment, she would be at least 90 when the debt is paid off.
I dont know if I will default, said Correa. I dont know when Ill retire.
Correas daughter, who requested that her first name not be used, majored in journalism and public relations at DePaul, graduating in 2013. She works for a nonprofit organization in Chicago and said she pays about $400 a month on her loan.
DePaul, the largest Catholic university in the United States, cautions parents and students to borrow only what is prudent, Jon Boeckenstedt, associate vice president of enrollment and marketing, said in an email.
We cannot control how much a parent borrows on a PLUS loan for an undergraduate, he said.
Parents can borrow to cover tuition, room, board and books, minus grants or loans the student receives. PLUS loans also carry an origination fee of 4.3 percent. The current interest rate is 6.8 percent, and it was almost 8 percent from July 2006 to June 2013.
When money comes from the government, a trusted source, parents do have good reason to borrow, said Merrill, the Harvard lecturer. But the problem is their income is not going to change based on their kids education.
Parents arent eligible for most programs that offer reduced payments for struggling student borrowers based on income.